🇬🇪 Tax residency in Georgia

You'll be a tax resident of Georgia if you spend 183 days or more there in any 12-month period. That’s the headline number. But it's not the whole story. Georgia also uses a "centre of vital interests" test. This means even if you’re under the 183-day mark, you could still be considered a resident if your personal or economic ties to the country are stronger than anywhere else. Think family, property ownership, or a registered business.

What constitutes a "centre of vital interests"? It's about where you have the most significant connections. This could be your permanent home, your family's residence, or where you conduct your primary economic activities. If you own property in Georgia, have your spouse and children living there, or are actively managing a business registered in Georgia, these factors can push you over the line for residency, even if you technically spend less than 183 days in the country. It's a subjective test, but the more ties you have, the riskier it gets.

Georgia operates on a territorial tax system. This is good news. It means you're generally only taxed on income earned within Georgia. Foreign-sourced income is often exempt, provided you aren't deemed a tax resident under that centre of vital interests test while earning it. If you are a resident and your income is worldwide, the top marginal tax rate is 20%. For someone earning, say, $100,000 USD annually from foreign sources, that’s a potential $20,000 tax bill in Georgia. That's a significant chunk. The threshold for this higher tax bracket kicks in at around $155,000 USD† annual income. For most digital nomads, this worldwide taxation is something to actively avoid by structuring your affairs outside Georgia or meeting the residency exit criteria.

There's a special regime for Individual Entrepreneurs. If you qualify, you can pay a flat 1% tax on your turnover, up to approximately $155,000 USD† in annual revenue. This is incredibly attractive. To qualify, you generally need to be registered as an Individual Entrepreneur in Georgia, and your income must be derived from specific eligible activities, usually services rendered to non-Georgian residents. This regime shelters your business income from the standard progressive income tax rates. However, it doesn't exempt you from other taxes like property tax or VAT if applicable. It's a powerful tool, but eligibility is key. You can't just declare yourself an IE and get the rate; you must meet the criteria.

When it comes to tax treaties, Georgia has agreements with many countries to prevent double taxation. For US citizens, the US-Georgia tax treaty is relevant. It helps determine which country has the primary right to tax certain types of income and provides mechanisms for claiming foreign tax credits. Similarly, UK and German citizens will find that treaties with their home countries exist. These treaties often include tie-breaker rules for residency and may exempt certain types of passive income or business profits if you're a resident of the other treaty country. The core principle is that you shouldn't end up paying full tax in both countries on the same income.

Hiring a local accountant in Georgia makes financial sense once your potential tax liability reaches a certain point. If you're earning over, say, $50,000 USD annually and are unsure about your residency status or how to structure your income to take advantage of the 1% IE regime or territorial taxation, paying an accountant $50-$100 per month can easily pay for itself. They can help you navigate the complexities, ensure compliance, and potentially save you thousands in taxes or penalties. It's an investment in peace of mind and financial efficiency.

Georgia’s tax system is favourable for non-residents and those who can structure income streams outside its borders.

This information is for educational purposes only and does not constitute legal or tax advice.